Category: Economic measurement

Goldman Sachs Fined £20m

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Philosophy of Business

Britain’s Financial Service Authority has fined Goldman twenty million pounds.

Goldman kept vital information from the government regulatory agencies in Great Britain, and most certainly from the investing public as well. Goldman Sachs has been involved in the melt down of the Greek economy, unfair home loans in the United States (paying a 60 million dollar penalty), and a wide variety of violation of American financial regulations.

Perhaps someone should catalog the company’s activities around the world. It would seem from many, many news reports that pushing the boundaries of the law and direct law breaking are habits of the company. Considering the firm’s immense financial holdings, these practices could post serious dangers to the American economy.

Andrew Comments On “Suggested-Rules-For-Corporate-Moral-Decision-Making.”

On By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, Economic measurement, ethics, Philosophy of Business, shareholder

Andrew has once again offered his insights and, as usual, I am more than pleased to post them. I want you, gentle reader, to understand that if I get a post of more than two or three paragraphs (and it is thoughtful and on point), it is going to appear as a blog post. This blog isn’t just about me. If I didn’t think you were intelligent and perceptive, I wouldn’t write this thing.

Andrew is commenting on my blog entry, Suggested Rules for Corporate “Moral” decision making.

(I don’t post Andrew’s last name, his e-mail, etc. He has not directly given me permission and I am loath to volunteer such data.)

Here’s what he has to say –

Mr. Badaracco seems to put much stock into the idea that what is popular is best. 2 of the 3 steps in his quick process revolves around how others will perceive the decision. I think this is a shallow and intellectually hollow way of developing a system of ethics.

The “Golden Rule Test”, I think, warrants some merit, but it also has a flaw. Sometimes the best decision for a company will involve a negative impact to one or more individuals. If one utilizes this rule and thinks “what if I were the one being laid off or fired?”, then it could lead the CEO to make a decision that, while compassionate, is detrimental to the company as a whole.

I find the long method to be more intellectually and morally stable. Of course, its not perfect either. I agree that #1 is a good place to start, and that it alone is not sufficient. #2 is a fairly simple question in my mind. The rights of the people involved are usually determined by the overall society that the corporation resides in. This can, of course, vary from society to society. The value and character of the organization should be paramount. To preserve that, the leader must act in accordance with the organizations set of values. If he does this, then he needs not worry about how his character is perceived. The character of the organization is inevitably linked to the character of its leader.

My Excellent Students

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics

One of the things I like to teach my students is that they have no intellectual inferiority in regard to the Ivy League schools.

On the face of it, that may sound ridiculous, but it is not.

A great many of these heavily lauded (and immensely well paid) graduates of the schools blessed by the establishment have participated wholly and happily in the greatest financial debacle in history. Their well honed degrees disguised their incompetence, their stupidity, their lack of intellectual depth and their overwhelming sense of entitlement.

My student are minimally superior in that they have not severely damaged the economic structure of their nation.

The fact that so many of these Ivy Leaguers journey off to cash in their degrees and their honor in various financial firms is a black mark against our educational system. You see, we depend on this system to produce the scholars, the politicians, and all those various professions which make nations function with honor and purpose. Instead we get a rush of graduates toward a predatory system of financial institutions.

Many of my students, quite possibly all, will have a larger purpose in their lives than playing with other people’s money. Of course, it is likely that there will be a few bad apples, but that is true among all large groups of people.

Are the elite schools creators of the best and brightest? I don’t believe that any more. They are often the leaders of the nation? But the current situations is hardly a testament to capability and well balanced education.

But my students would try to take care of their fellow citizens never forgetting where they came from and the struggle they must make to simply get a job in the current market. They deserve better. Nevertheless, from this crop is my hope, that these people, these individuals working to better themselves will be the leaders of tomorrow, not the children of the elite, not the well favored few, but my students.

My students have a sense of inferiority to these people. But these graduates of these “special” schools have no advantage in learning or intelligence. They thrive on their contacts. They prosper based on economics that favors what they do as more important than the producers of this nation, the people that actually make things.

It is not a matter of free will or gumption that keeps my students from being as successful as those. It is a well ingrained attitude, a lack of expectations, and a consistent contempt and suspicion of the educated. We can do better. We, the citizens, have a responsibility to our children to act the part of guides and supporters. I do not mean the blind support given whatever the merits. I mean a willingness to encourage excellence and the hard, difficult job of not submitting to the idea that some people are better. They are better when they prove it. My student can prove their excellence.

But learning is not just a matter of schooling. It is a life long endeavor. Most people stop when they put that piece of paper on the wall. But that is all they are, paper, wood pulp. If my students are to change this state, this country, and this world, there must be support and dedication to a lifetime of learning. A person who continues the task of development, of becoming, is inferior to no learner on earth, whatever their degree.

There are books and as long as there are books – as long as the great works of mankind – are readily available, any human being can become educated and developed. Any individual can build the power of understanding, a basic command of the ideas that govern this society, and a sense of purpose in their lives. But we have to believe. My students need that. My students need to walk in a community where people believe they are just as good, just as smart and just as capable as students from anywhere in the world.

My students cannot get into Harvard or Yale. They do not have parents who give hundreds of thousands of dollars to these institutions. Their parents did not go and thus they can’t get in as a “legacy.” (A legacy means that no matter how pitiful a student was, if he graduates, his children automatically get in. Well, fish rot from the head.)

All they have is the power of their minds and the determination of their hearts. If they only believe.

James Pilant

Learn About The Magic Word – PREEMPTION

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure1 Comment

Preemption is a legal device that gets rid of state regulation by replacing it with federal regulation. Without preemption, a corporation might have to be worried about multiple lawsuits and criminal prosecutions. By preempting the states, the feds make state regulation of corporations impossible.

The America I Grew Up In

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure

This is a quote from Rogue Columnist –

I grew up in an America that had created the greatest middle class in the history of the world, a great civilization not just a great market. Where people were citizens, not consumers. Where we landed men on the moon and would always be on the forefront. Where Martin Luther King Jr. said, “Let justice roll down like waters and righteousness like a mighty stream…” And we worked for that. But we’ve become a different America and different Americans. For King warned, “A nation or civilization that continues to produce soft-minded men purchases its own spiritual death on the installment plan.”

I fully agree. I believe in the unity of citizenship and a cooperative ethic recognizing that we are all in this together particularly in these very bad times.

James Pilant

Shareholder Power?

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure, Philosophy of Business, shareholder

One again, I’m going to lament that the people who own the corporations don’t seem to have any actual control over them. Let me quote Nouriel Roubini from his excellent essay, Gordon Gecko Reborn.

There are also massive agency problems in the financial system, because principals (such as shareholders) cannot properly monitor the actions of agents (CEOs, managers, traders, bankers) that pursue their own interest. Moreover, the problem is not just that long-term shareholders are shafted by greedy short-term agents; even the shareholders have agency problems. If financial institutions do not have enough capital, and shareholders don’t have enough of their own skin in the game, they will push CEOs and bankers to take on too much leverage and risks, because their own net worth is not at stake.

At the same time, there is a double agency problem, as the ultimate shareholders – individual shareholders – don’t directly control boards and CEOs. These shareholders are represented by institutional investors (pension funds, etc.) whose interests, agendas, and cozy relationships often align them more closely with firms’ CEOs and managers. Thus, repeated financial crises are also the result of a failed system of corporate governance.

That’s what I think too.

Simple statement – We hear over and over again about property rights but start talking about actual shareholder control, power held by the actual property owners, howls of outrage cloud the horizon.

The people that own the corporations should have say about what they do.

James Pilant

Corporate Crime – Travesties Of Justice

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure

Watch this video where Mokhiber explains how corporates avoid penalties for their crimes.

Is Corporate Crime Simply The Way Things Are?

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics2 Comments

Parenti claims corporate crime is far more endemic than commonly thought. Parenti’s reporting of corporate crimes and their penalties is scathing.

And They Don’t Pay Their Share Of Taxes Either

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure

I wrote in the previous post about how the fifty companies that laid off the most workers paid their CEO’s a total of 598 million dollars. But if you read the study itself, you discover that they also shirk their duties as good corporate citizens.

This is from the study –

Under current law, U.S. corporations face a 35
percent statutory tax rate on corporate profits. Of the 50
layoff leaders, only two reported paying this statutory
rate in 2009 and most paid substantially less, according
to an IPS analysis of domestic earnings and federal tax
payments in company 10-K reports.20 Hewlett-Packard,
under Hurd, remitted $47 million in federal corporate
income tax, a mere 2 percent of the company’s reported
$2.6 billion in pretax domestic net income.


Citizens for Tax Justice has used forensic accounting
methods to demonstrate that corporations
often pay an even lower tax rate than they report to
the SEC. Overall, as a result of various tax avoidance
schemes, U.S. corporate income taxes have plummeted
from almost a third of all non-Social Security federal
tax revenues in the 1960s to only a sixth of total taxes
today.22

In some extreme cases, major U.S. corporations
are actually paying less in taxes to Uncle Sam than
they pay, in compensation, to their CEOs. At Occidental
Petroleum, for instance, CEO Ray Irani made $31.4
million last year. That represented almost twice as much
as the $16 million the international oil firm paid in federal
corporate income tax for all the services the federal
government provides.

It is almost too obvious to mention that when corporations avoid their taxes, the burden falls on the middle class.

What is meant by CSR, corporate social responsibility? Are they just code words, that mean, “Get off my back and stop complaining,” or “Can’t you crazed citizens and nosy government officials recognize our good works and let the magnificent engine of capitalism grind on?”

I wonder if it is just a public relations thing. I bet you do too.

James Pilant

Job Cutting CEO’s Average 12 Million In Salary (not counting other benefits)

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure

The fifty largest job cutting companies in the United States paid their chief executive officers a total of 598 million dollars.

Read some more –

The nation’s biggest job-cutting companies paid their top executives an average of $12 million last year, according to a report released today.

The 50 U.S. chief executives who laid off the most employees between November 2008 and April 2010 eliminated a total of 531,363 jobs, according to the Institute for Policy Studies, a research group that works for social justice and against wealth concentration.

In “CEO Pay and the Great Recession,” the institute said the $598 million in combined pay for the 50 executives would have paid one month’s worth of average-sized unemployment benefits for each of the laid-off workers.

The top 50 layoff firms reported a 44 percent average profit increase for 2009, the report said.

“These numbers all reflect a broader trend in Great Recession-era Corporate America: the relentless squeezing of worker jobs, pay and benefits to boost corporate earnings and maintain corporate executive paychecks at their recent bloated levels,” the authors wrote.

The complete article is here.

The complete study is found here.

Job killing has been profitable for many years now but the scale of the rewards are almost unimaginable. Reflect that 12 million dollars yearly is a million a month. In a thirty day month, that’s about 33,000 dollars a day or 4,166 dollars and hour or 69.44 a minute.

James Pilant